After huge plane orders, Airbus and Boeing sign Gulf supplies deals

Monday, 18 Nov 2013 | 9:34 AM ETReuters

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Source: Airbus

An Airbus A320 - similar to the aircraft used by Air Algerie.

Airbus and Boeing signed deals to buy some $5 billion of parts and materials from Abu Dhabi on Monday, in a sign Gulf states are seeking a reciprocal boost to their economies from the huge orders they have placed with the plane makers.

Gulf airlines, led by Dubai's Emirates and Abu Dhabi's Etihad, struck plane deals worth almost $150 billion — or more, including options — on the first day of the Dubai Airshow on Sunday.

The buying spree underscored a shift in power in the aviation industry, as oil-rich, fast-growing economies of the Gulf take advantage of their strategic position between East and West to draw more travellers from hubs in Europe andAsia.

While the orders are a big boost to Airbus and Boeing, the world's dominant civil aircraft manufacturers, suppliers in Europe and the United States are worried they will suffer from the growing globalization of the aircraft supply chain, in which Gulf firms are playing a part.

Airbus agreed a new deal on Monday with Abu Dhabi's state investment fund Mubadala to expand their partnership "for further composite and metallic aerostructure production in the United Arab Emirates, in addition to procurement of composite raw materials, worth $2.5 billion," Mubadala said.

Reuters reported on Sunday the two parties were close to an agreement.

Separately, Boeing said it had also signed a new deal with Mubadala for Abu Dhabi to supply as much as $2.5 billion in advanced composites and machine metals to the U.S. planemaker.

In addition, Boeing said it had reached an agreement with Abu Dhabi's Tawazun Precision Industries, a state-owned manufacturing company, to set up a facility in the United Arab Emirates for producing aerospace parts.

The facility will be up and running by 2016 and will produce parts for other aircraft manufacturers as well as Boeing, the two parties said, without disclosing financial details.